Bitcoin (BTC) Derivatives Trading and Open Interest See 'Largest Plunge' in a Year

▲ Bitcoin (BTC) decline/AI generated image

Bitcoin (Bitcoin, BTC) derivatives trading volume and open interest have plummeted by the largest margin in a year. As leverage liquidations and the contraction of the derivatives market coincide, warnings of increased volatility in the spot market are growing louder.

According to crypto media outlet U.Today on September 29 (local time), Bitcoin (BTC) derivatives market indicators recorded the largest plunge among figures compiled over the past year. With trading volume and open interest simultaneously shrinking across major virtual asset futures and options exchanges, a significant exit of derivatives-centric speculative leverage is observed.

This sharp decline in derivatives indicators coincided with large-scale position liquidations that occurred as Bitcoin tested the $83,000 level. During the price correction phase, excessive long and short positions were liquidated in a cascade, causing market liquidity to temporarily contract. In particular, the sharp decrease in open interest on major derivatives exchanges led to a stronger wait-and-see attitude among market participants.

Market experts diagnosed that the rapid contraction of the derivatives market could be a healthy correction process, clearing out the leverage bubble. While the exit of speculative funds may alleviate short-term price distortions, the risk of sharp price fluctuations due to bid-ask gaps during large spot trades has increased due to reduced liquidity.

As Bitcoin stands at a critical juncture before breaking $85,000, the recovery speed of the derivatives market is considered a key variable for future trends. Experts analyzed that since derivatives indicators have fallen to their lowest level in a year, a re-evaluation of short-term support levels will be inevitable if inflows from spot exchange-traded funds (ETFs) and buying pressure from on-chain long-term holders fail to support the market.

[Article Key Summary]

-Bitcoin derivatives trading volume and open interest showed the largest decline in the past year.

-Price correction coupled with cascading liquidations led to a significant clearing of excessive speculative leverage in the market.

-With increased short-term volatility risk due to reduced liquidity, attention is drawn to whether spot demand will provide downside support.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*